Chevron reminds everyone why it is the preferred energy stock

By Claudia Assis

FactSet

Chevron vs. Exxon in the past 12 months

Chevron Corp. on Friday reminded Wall Street why it is the darling among the large oil and gas companies — it beat expectations, kept its share buyback program intact, showed an increase in production, and told investors its dividend is a “first priority.”

To top it all off, weakness in its refinery business — first-quarter maintenance was heavier than expected — is expected to go away by the end of next quarter, with fire-damaged Richmond, Calif. refinery expected to be fully back then.

Shares led energy stocks higher on Friday amid weakness across the board for equity markets.

Dividend is a first priority, and investors “should expect that to continue to grow,” Chevron Chief Financial Officer Pat Yarrington said in a conference call with analysts. Chevron also kept its share buyback intact at $1.25 billion.

Almost as good: Chevron’s earnings beat. It reported a first-quarter profit of $3.12 a share, versus expectations of $3.09 a share, centered in its oil and gas exploration and production business. It said its major projects are on target to deliver long-term production growth.

Chevron’s asset sales program will likely be scaled back in coming years, Yarrington said. The company sold about $3.3 billion in assets in 2012, but it is looking to return to its usual $1 billion to $3 billion a year, she said.

Asset sales will follow “standard practice” at Chevron. “On balance, we are very happy with our portfolio … but we look for opportunities to pare it if we think the asset will have more value for somebody else,” Yarrington said.

Operations at refineries in El Segundo, Calif., and Pascagoula, Miss., are back to normal, and the Richmond, Calif. refinery, damaged by a fire in August, is expected to be back at full operations this quarter, she said. The first-quarter was heavy in maintenance but the company expects that is unlikely to be the case in the next quarter.

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